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Statutory Requirement: DoD must establish procedures for reviewing and approving the use of non-DoD contracts before DoD activities procure goods or services through a contract entered into by an agency outside the Department of Defense for an amount greater than the simplified acquisition threshold (currently $100,000).

To comply with Section 854 of the FY05 NDAA, USD (Comptroller) and USD (AT&L) issued a joint memorandum subject: Proper Use of Non-DoD Contracts dated October 29, 2004

Joint memorandum directs that procedures be put in place for reviewing and approving the use of Non-DoD contract vehicles for amounts above the simplified acquisition threshold

Applies to orders placed by DoD contracting offices “direct acquisitions” and to “assisted acquisitions” i.e. MIPRS sent to Non-DoD contracting offices, both under the Economy Act and not under the Economy Act.

Evaluate whether using a Non-DoD contract is in the best interests of DoD, considering such factors as:

Satisfying customer requirements

Schedule

Cost effectiveness (taking into account discounts and fees)

Contract administration

Determine that tasks to be accomplished are within scope of the contract

Review funding to ensure it is used IAW appropriation limitations

Provide unique terms, conditions and requirements to the assisting agency for incorporation into the order/contract to comply with all applicable DoD-unique statutes, regulations, directives and other requirements

For services: Expired funds to be deobligated and returned unless all of the following criteria are met:

The order was made during the period of availability of the funds;

The order was specific, definite and certain, with specificity similar to that found in contractual orders; and

In the case of severable services, the performance period does not exceed one year.

DoD expired funds may not be used by a servicing agency to enter into a severable services contract. However, DoD expired funds may continue to be used for a severable service contract, properly entered into by the servicing agency before the funds expire, provided the period of contract performance does not exceed one year.

A service contract is nonseverable if the service represents a single undertaking, producing a single or unified outcome, product or report that cannot be subdivided for separate performance in different fiscal years. (Example – a contract to re-carpet or paint an office is non-severable)

A service is severable if it is continuing and recurring in nature or can be separated into components that independently meet a separate need of the government. Most program support contracts are continuing and recurring in nature, and therefore are severable requirements.

USD(Comptroller) Memo, subject: Proper Use of Interagency Agreements with Non-Department of Defense Entities Under Authorities Other Than the Economy Act, dated March 27, 2006

Directed a 100% review of interagency agreements

Close out completed agreements

Expired funds to be deobligated and returned unless they meet the criteria identified in the OUSD(Comptroller) Memo, subject: Proper Use of Interagency Agreements for Non-Department of Defense contracts Under Authorities Other Than the Economy Act, dated March 24, 2005.